Most of the hospital closures occurred in states that did not expand their Medicaid programs following the Affordable Care Act of 2014

Sustained financial pressure is not limited to clinical
laboratories. Rural hospitals are under grave financial pressure as well.
These hospitals are particularly vulnerable, and many have closed their doors,
leaving local physicians and independent pathologists in those communities with
an unclear path going forward.

And Medicaid
expansion, or more accurately the lack thereof, may have played a major
role in these closures.

Medicaid Expansion
‘Coverage Gap’ Involved in Rural Hospital Closures

Medicaid expansion seems to be one factor affecting hospital
closings. According to Becker’s Hospital Review (Becker’s) more hospitals have closed in
states where Medicaid was not expanded following the passage of the Affordable
Care Act in 2014.

This is likely related to the increasing number of uninsured
people in those states. Incomes tend to be lower in rural areas and the number
of uninsured people is higher there than in urban settings.

In a report on this coverage gap, the Kaiser
Family Foundation (KFF) explains, “In states that do not expand Medicaid,
many adults fall into a ‘coverage gap’ of having incomes above Medicaid
eligibility limits, but below the lower limit for Marketplace premium tax
credits.”

The graphic above is taken from the North Carolina Rural Health Research Program study. It shows the location of 95 hospitals that closed between 2010 and 2018. The researchers defined rural hospital closures as “… any short-term, general acute, non-federal hospital that is A) not located in a metropolitan county, or B) is located in a RUCA [Rural Urban Commuting Area] type 4 or higher, or C) is a Critical Access Hospital. For the purposes of this project, we have defined a hospital closure as the cessation in the provision of in-patient services.” (Photo copyright: University of North Carolina.)

Most Hospital
Closures in Rural Southern United States

Approximately 2.2 million people are affected by the
coverage gap, and there are similarities between where those people live and
where hospitals are closing. For example, 89% of those caught in the coverage
gap live in the south—where the majority of hospitals have closed, KFF noted.

According to Becker’s:

Texas has seen the most closures with 15;

Tennessee is second with nine closures since
2010;

Next is Georgia at seven; and,

Alabama, Mississippi, North Carolina, and
Missouri are tied each with five hospitals closed in the last few years.

About a third of the hospitals (21) that closed between 2013
and 2017 were 20-35 miles away from the next nearest hospital, according to a
report given to Congress by the Medicare
Payment Advisory Commission in June of last year.

A printable list of the 95 closed rural hospitals can be
downloaded by clicking on this
link.

GAO Reports For-Profit
Hospitals Most Vulnerable

The combination of lower incomes and fewer insured people
makes it difficult for hospitals to cover their fixed costs, leading to
bankruptcy. According to a report released by the Government Accountability
Office (GAO), for-profit hospitals have been disproportionately affected by
bankruptcy.

Only about 11% of the hospitals in rural areas
were for-profit organizations in 2013;

However, 40% of those hospitals that closed due
to bankruptcy between 2013 and 2017 were for-profit.

“While Medicaid expansion has improved all hospitals’
operating margins and total margins, the effect was particularly pronounced in
rural areas,” noted a report from the Center
on Budget and Policy Priorities. That’s because uncompensated care is
provided more often in for-profit, rural hospitals located in states where Medicaid
expansion did not occur.

Healthcare is undergoing massive changes and the reasons for
the rising number of health system and hospital bankruptcies are complex and
layered. The role of pathology labs isn’t always clear and many clinical
laboratories are caught in shifting sands without a clear path forward. In
rural areas, where hospitals are closing at an alarming rate, that is
particularly true.

Thus, clinical laboratory managers and stakeholders should
focus on improving outreach and solidifying revenues to navigate the uncertain
waters that lay ahead. Especially in poorer states where high numbers of people
cannot qualify for Medicaid coverage.